The renminbi (Chinese yuan) remained the world’s fifth most active transactional currency in February with a growing share in global payments, a sign that its status as an emerging international currency is steadily rising, experts said on Friday.
Payments in renminbi, also known as the yuan, accounted for 2.19 percent of global payments by value last month, up from 1.91 percent in January, ranking fifth among major currencies for the 13th month in a row, according to financial messaging services provider SWIFT.
The value of renminbi payments increased 7.52 percent compared to January, while in general, payments in all currencies decreased by 6.54 percent, SWIFT said in a report on Thursday.
Zhou Maohua, a macroeconomic analyst at China Everbright Bank, said the renminbi’s rising share of global payments shows that foreign trade activities may have regained some momentum after the Spring Festival holiday ended in late January.
More fundamentally, Zhou said the renminbi’s stable rank as the fifth most active payment currency reflects the long-term trend for it to function increasingly as an international currency as China improves its cross-border renminbi payment and settlement infrastructure.
Also pointing to the renminbi’s rising position in payments, the Cross-border Interbank Payment System — or CIPS, which specializes in renminbi cross-border payment clearing — processed 96.7 trillion yuan ($14.1 trillion) worth of transactions last year, up 21.48 percent year-on-year, the People’s Bank of China, the country’s central bank, said on Monday.
The growing role of the renminbi in the international currency system is also being seen in financial markets. CME Group, a global derivatives marketplace, announced earlier this month that it is set to launch option contracts on dollar/offshore renminbi futures in April, a move experts said will help boost the development of offshore renminbi markets.
There is an opportunity for China to further internationalize the renminbi, said Yang Haiping, a researcher at the Central University of Finance and Economics’ Institute of Securities and Futures.
Yang said that favorable conditions include the country’s steady momentum of high-quality development, the relative stability of yuan exchange rates and the international community’s falling confidence in the dollar system, exacerbated by the recent banking turmoil.
Shao Yu, chief economist at Orient Securities, said the key for China to seize the opportunity lies in further deepening financial market reforms and opening-up to strengthen the renminbi’s role in investment and financing.
It is important to attract more overseas investment in renminbi-denominated financial assets and boost the issuance of renminbi bonds by foreign entities, Shao said, adding that much more effort is required for the renminbi to catch up with the dollar in these respects.
SWIFT data shows that the dollar remains the most active currency for global payments, accounting for 41.1 percent of global payments in February, followed by the euro, the British pound, the Japanese yen and the renminbi.
Pan Gongsheng, vice-governor of the PBOC, said in early March that the country will work to lift the currency’s global profile by improving the trading and settlement system for cross-border investment and financing using the Chinese yuan.
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